Midsize U.S. law firms enjoyed a greater increase in client demand and suffered a smaller dip in productivity in the first half of 2022 compared with their largest counterparts, according to a new report by Thomson Reuters Institute. It marked the first time since 2015 that midsize firms on average outperformed the top 100-grossing U.S. law firms in terms of demand growth.
In a year that has seen an overall cooling of demand for legal services, demand increased 1.7% for midsize firms through the end of the second quarter of 2022 compared to 2021, the report said. Demand decreased 0.2% for the 100 top-grossing firms as ranked by the American Lawyer, while firms ranked 101-200 saw demand increase by 1.8%.
Productivity, meanwhile, fell the most for Am Law 100 firms, dropping 3.3% in the first half, compared to 1.8% for midsize firms. Many of the largest U.S. law firms raced to hire additional lawyers last year amid a historic boom in corporate deals.
The midsize group saw a 6.5% increase in demand for real estate work, compared to 5.4% for Am Law 100 firms. Demand for labor and employment work was up 2.5% for the midsize cohort but declined 1.9% for the top 100. In other practice areas such as tax, bankruptcy and M&A, however, midsize firms saw demand crater faster than larger firms. Demand for M&A work fell 10.2% for midsize firms in the first half of the year compared to 2021, while M&A demand was down 5.3% for all firms, the report said.